We wrap up our discussion of September’s opinions from the Federal Circuit with a question about whether a decision to stay (that is, put into a holding pattern) can be appealed and a denial of a petition to rehear en banc (by the entire court) a case involving the very important area of preliminary injunctions.
Really, That’s Not Appealing
Spread Spectrum Screening LLC, v. Eastman Kodak Company, No. 2011–1019 (Fed. Cir. Sept. 26, 2011) (Chief Judge Rader, Judges Lourie and O’Malley)
Here, the core dispute is over an infringement suit against a manufacturer’s customers and whether it should be allowed to proceed. One strategy patent owners sometimes use to put pressure on a manufacturer to settle is to sue a manufacturer’s customers for infringement, and Spread Spectrum Screening (“S3”) did that here. S3 sued Kodak and four of its customers in the Northern District of Illinois. S3 claimed that Kodak’s Staccato software infringes S3’s patent, which covers a commercial printing process for generating “half-tone images”—images that use patterns of dots instead of fully filled-in images (think of comic strips).
Kodak wanted to protect its customers, and moved to separate S3’s lawsuit against Kodak from its suit against Kodak’s customers. The district court said that the suit against Kodak’s customers was “merely peripheral” and that S3 only sued those customers so that it could bring the case in Illinois. The district court then stayed—that is, held off proceeding with—the case against Kodak’s customers until the infringement case against Kodak was resolved, and granted Kodak’s motion to move the case to the Western District of New York. S3 wanted to keep going against Kodak’s customers (presumably to apply pressure to Kodak to settle) and appealed the court’s stay order to the Federal Circuit.
Generally, you can only appeal either a final judgment or an order relating to an injunction, although there are exceptions.
S3 main argument was that the stay, combined with other delays, would keep them from getting the case against the customers heard. So, in effect, this was a final judgment. The court wasn’t buying it—delay isn’t the same thing as having the case resolved.
S3 also tried to argue that the stay had the “practical effect” of an injunction. The court didn’t buy this either. If S3 was correct, then all stays would be appealable immediately.
The court dismissed the appeal, so S3 loses some of its leverage over Kodak.
The Spread Spectrum opinion is available at the Federal Circuit’s website.
Why Can’t We Be Like the Other Circuits?
Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC, No. 2010–1382 (Fed. Cir. Sept. 29, 2011) (en banc)
Judges Newman, O’Malley, and Reyna seem to smell something coming from the court’s vote, and it ain’t from a diaper. We wrote about the original decision in this case a few months ago. Kimberly-Clark sued First Quality for infringing its patents for training pants. The trial court issued a preliminary injunction, which would have prevented First Quality from continuing to sell its pants until the case was resolved. The Federal Circuit reversed, finding that First Quality’s defenses had “substantial merit.”
Kimberly-Clark asked the entire Federal Circuit to review the decision, but the court declined. Judges Newman, O’Malley, and Reyna dissented. Judge Newman, joined by Judges O’Malley and Reyna, pointed out in a detailed 12-page opinion that the original panel used a standard for a preliminary injunction that is very different from every other federal court of appeals.
The standard test for whether to issue a preliminary injunction has four factors to consider:
- the requester’s likelihood of success on the merits;
- whether or not the requester will suffer irreparable injury during the litigation if the preliminary injunction is not granted;
- whether or not that injury outweighs the harm to other parties if the preliminary injunction is issued; and
- whether the grant or denial of the preliminary injunction is in the public interest.
Some Federal Circuit opinions do apply this test, which only adds to the confusion.
Judge O’Malley, a former district court judge herself, wrote an opinion emphasizing the difficult position that district court judges face given the Federal Circuit’s conflicting precedent. She expressed her disappointment that the court chose not to take up the issue.
You can read these opinions for yourself. We’d love to hear what you think.